WIRED Money takes place in Studio Spaces, London on May 18, 2017. For more details and to purchase your ticket visit wiredevent.co.uk

The world is full of big figures, but this one is more shocking than most. $600bn (£483bn) is lost every year from global trade as a result of “maritime fraud” - when goods go walkabout from ships during transactions. And this is just one tiny part of the global business of trade. Add it all up, and there are likely trillions of dollars lost to fraud each year. A coalition of companies, coders and charities believe they have a solution: the blockchain.

Move over Bitcoin, the blockchain is only just getting started

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“The blockchain can do for transactions what the internet did for information,” says Arvind Krishna, senior vice president at IBM overseeing the company’s involvement in the Hyperledger project, a new fabric for the blockchain to be used in a range of industries, including healthcare, shipping and government services. The blockchain itself is a decentralised electronic ledger, with duplicate copies on thousands of computers around the world. It cannot be altered retrospectively, meaning authentication and ownership is easier to certify and less vulnerable to fraud. The diamond industry is a great example of the power of the blockchain. A diamond's origin can be rapidly lost as it exchanges hands over the years. But Everledger, a global digital registry for diamonds, powered by the blockchain, was founded in 2015 to help prevent this.

The Hyperledger project is an open source, open governance group allowing anyone who signs up as a legitimate member to participate. IBM got involved in the middle of 2015 and during the initial stages its engineers were the driving force behind the lion’s share of the work. That has now changed to include significant involvement from the London Stock Exchange, Cisco and Intel.

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It has seen IBM partner up with more than 100 other companies to try and iron out the levels of distrust in the world’s transactions. “For the first time with blockchain, we have a way of a transaction happening where both people can trust each other; that the information they put in cannot be changed or altered once the network has accepted it.”

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By ironing out the fear of fraud, not only could the blockchain prevent money disappearing from business: it could also open up those businesses to a new range of people. “When you have this inherent lack of trust in the world, you create third-party intermediaries – but the fact you have these means there’s extra cost and friction in business,” says Krishna, who will be speaking at WIRED Money 2017. That extra cost and effort to engage with third parties means that smaller businesses are often excluded from bigger deals. “A little farmer in a little country has no way of getting into the supply chain for McDonalds because it’s too expensive,” Krishna says. “But if a blockchain allows them to participate that means they can make a bit more revenue.”

IBM

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In all, 50 IBM workers are involved in the Hyperledger project. “It’s a big investment from us,” Krishna says, and mimics their involvement in a similar open source computing project in the late 1990s: Linux.

The Linux Foundation hosts the Hyperledger project, and hopes that the distributed ledger format of the blockchain will allow transactions to be carried out on computers with a level of trust and accountability that is too frequently missing from modern-day trade. That trust should extend not only to business-to-business interactions, but customers too.

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“In retail, when it comes to the provenance of the goods I’m buying, I really want to know they came from a certain manufacturer,” explains Krishna. The Hyperledger will allow consumers to see where their bananas or flatscreen TV has come from through an indelible, inalterable record in the blockchain. In healthcare, the number of different health systems involved in many countries outside the UK means there’s a mass of information, some of which can get lost in translation. The Hyperledger aims to counteract that. In government, passports and official ID could be held in the blockchain, cutting down on identity fraud and providing a better, stronger database of records. And in the financial services industry, securities clearing and settlement of foreign exchange can benefit from permanent records that can’t be fudged. “In all of these, blockchain is literally going to change the way the world works,” says Krishna.

In early March the first practical example of the Hyperledger came to fruition. In partnership with Maersk, IBM launched a blockchain solution that helps manage the paper trail of tens of millions of shipping containers traversing the world’s seas – accountable for 90 per cent of goods in global trade. It aims to help cut down on maritime fraud, and to eat into the cost (estimated to be around 20 per cent of the cost of physically transporting the goods) of processing documentation for each container.

Of course, for those outside the WIRED universe, the idea of the blockchain and the Hyperledger remain abstruse concepts. “Today, when you mention it most people look for an explanation,” says Krishna. But give it time and it’ll become better known. “When we talked about the internet back in 1993, it was the same. It was only this thing a few people understood. Then within five years it went from being an esoteric term reserved for nerds and the cognoscenti to being a word that was presumed everyone knew what it means.”

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WIRED asks if we’re using that analogy, where we are with the blockchain right now. Krishna replies right away: “1994.”

So we probably have four or five years before the massive explosion, the great switch on, the blockchain equivalent of the great dial-up roll out? “Correct,” says Krishna. “But as we’ve seen with other things, the world moves fast. It might not take five years.”